Each of the companies has recently taken steps to reform their student-recruiting practices and reduce their dependence on federal student-aid funds. Mr. Marshall, in an interview, dismissed those moves as mostly “window dressing” that don’t deal with deeper challenges. “We don’t think the reforms are going to work,” he said. “The culture within these companies is not changing. (“Firm Says Poor Governance Puts 3 Higher-Education Companies at Risk of ‘Outright Failure‘”)
There’s more evidence this week that the fast rabbit for-profit universities (where I work) may be loosing their advantage against the slow-moving tortoises of the public sector. This seems particularly serious, because it could impact a company’s ability to attract new investment as well as borrow money at a reasonable rate. It also suggests the economic dilemma that will dominate business in the next decade.
For the last two or three decades, and especially in the last decade, a clever company or university could thrive by taking advantage of the Republican ideology that disabled regulations. No one was watching. As the regulatory apparatus slowly and unevenly comes back to life, these companies and schools will have to adapt. The pubic schools will no doubt survive but some for-profits may well go out of business.
The line between public and for-profit is blurry, though, and neither side has a monopoly on ethics or effective governance. The for-profits are so reliant on public money they are arguably not really private at all. That’s why the emerging regulatory system is going to have such an impact. And many of the public universities, like Penn State, are as corrupt and greedy as anything on Wall Street.
